Department of Justice Approves Disney-Fox Deal with One Condition

While Disney may still have a few hurdles to clear before they can officially take ownership of various 21st Century Fox assets, a major one was just cleared as the Department of Justice (DOJ) granted the deal provisional approval. [Updated on 6/28 to add quotes from Lachlan and James Murdoch].

However, the DOJ’s decision is contingent on Disney divesting the 22 regional sports networks they’d be acquiring from Fox.

Observers had questioned whether the networks would raise concerns given ESPN’s prominence, with Disney even offering to sell them if need be.

Since there are conditions on the approval, the DOJ filed a suit in the U.S. District Court for the Southern District of New York to block the proposed acquisition but also included the proposed settlement.

While this is a major development in Disney’s quest to close the deal with Fox, it’s still not too late for Comcast to increase their bid, with many analysts expecting them to.

That said, in their updated filing with the Securities and Exchange Commission, 21st Century Fox expressed continued concerns about a potential Comcast acquisition’s ability to past regulatory muster.

Those concerns were what initially caused Fox to decline Comcast’s original offer, although Comcast decided to enter a new offer a judge cleared the way for AT&T to purchase Time Warner.

Meanwhile, Disney and Fox have yet to announce a new date for each of their special shareholder meetings that had originally been set for July 10th.

What They’re Saying

Makan Delrahim, the head the Justice Department’s antitrust division: “American consumers have benefitted from head-to-head competition between Disney and Fox’s cable sports programming that ultimately has prevented cable television subscription prices from rising even higher. Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”

Lachlan and James Murdoch in a memo to colleagues: “There are still other conditions to closing, including stockholder approval and additional regulatory approvals outside of the U.S. At this point, we anticipate that the Disney transaction and the creation of new ‘Fox’ will be completed in 6 to 12 months.”

The Murdochs went on the say: “We realize the Department of Justice’s decision will reshape the future course of our regional sports businesses and add uncertainty for our colleagues across the RSNs. Our RSNs are an incredibly strong asset offering television’s most valuable content and we are confident that whatever the outcome, the future of our regional sports business will continue to be incredibly bright.”